Appeal No. VA95/4/026
AN BINSE LUACHÁLA Carbery Milk Products APPELLANT RE: Factory and land at Map Ref. 2PV.3B, Townland:
Dromidiclogh West, B E F O R E JUDGMENT OF THE VALUATION TRIBUNAL 1. By Notice of Appeal dated the 5th day of October 1995 the Appellant
Company appealed against the determination of the Commissioner of Valuation
in fixing a The grounds of appeal, as set out in the said Notice are: "1. that the valuation is excessive and inequitable and 2. This case was dealt with by way of an oral hearing which took place in Cork on the 11th day of September 1996. The only point in issue and argued before us was one of rateability. This in respect of certain milk tanks belonging to and forming part of the Company's operations at Ballineen in the County of Cork. If rateable, the parties have agreed that the appropriate valuation to place thereon is £99. Consequently, should this Tribunal hold with the evidence and submissions adduced on behalf of the Appellant Company then that part of the total valuation amounting to £945 in the Absolute column should be reduced to £846. 3. During the course of the hearing we heard evidence from Mr. John Holland
and Mr. Desmond Killen FRICS FSCS IRRV, a Valuer on behalf of the ratepayer
and from Mr. Frank O'Connor ARICS BSc. (Surveying) on behalf of the Commissioner.
Mr. Holland was formerly a supervisor with the Appellant Company and is
now a Production Manager. He was and remains intimately involved in all
aspects of production and has both technical and scientific knowledge
of the Company's operations and activities. From the evidence so given
the following are the relevant facts so found or agreed, which in our
opinion are material for the purposes of this appeal:- (g) In addition to mixing and blending all of these tanks are fitted
with mechanical agitators which inter alia have the effect of ensuring
that the fat content rises to the top and there is held in suspension
for the duration of its holding. Without such agitators the product would
disintegrate and quickly fall below any retrievable specification. Photographs and a schematic layout of the process carried on in the factory were proved before us and these together with the totality of the evidence presented a full and comprehensive picture of the precise activity carried on in this dairy processing factory. 4. On behalf of the ratepayer it was submitted that by way of a decision dated the 6th day of December 1988 this Tribunal had already decided that tanks, indistinguishable for valuation purposes from those the subject matter of this appeal were non-rateable. Indeed, following that decision agreement was reached between the Appellant Company and the Commissioner in that the subject tanks or those which they in fact replaced were non-rateable. (See Valuation Appeal - VA88/077 - Carbery Milk Products v. Commissioner of Valuation being an agreed determination of this Tribunal given on the 26th day of June 1989). Accordingly, it was urged that in the absence of any substantial change in material facts we in this Tribunal should adhere to and follow the aforesaid decision of the 6th December 1988. It was not contended however that such a decision constituted an estoppel whether by way of per rem judicatem or by way of issue estoppel. Secondly, and in any event, it was suggested that the tanks in question were designed or used primarily to induce a process of change and that accordingly they were non- rateable under Reference No. 1, of the Schedule to the 1860 Act as inserted into that Act by Section 8 of the Valuation Act, 1986. On behalf of the Commissioner it was alleged that the relevant principles of law had indeed changed following the decision of the Supreme Court in the case of CaribMolasses Company Limited v. Commissioner of Valuation, an unreported decision of the Supreme Court given on the 26th May 1993. It was stated that this judgement altered the basis upon which this Tribunal gave its judgement in the Mitchelstown case and that as a result the Commissioner was justified in looking afresh at each of the units in question. In addition, either as part of this submission or as a separate submission it was suggested that these milk tanks were rateable as plant under the aforesaid Reference No. 1. 5. In the Mitchelstown case there were in all five appeals, two dealing
with grain installations and three dealing with milk installations. The
latter three are described in page 2 of the judgement as:- Commencing at page 33 of the judgment the Tribunal dealt with the relevant law and its finding of facts. Firstly it quoted Section 12 of the 1852 Act, secondly it quoted Section 7 of the 1860 Act in both its original and amended form, thirdly it quoted the Schedule to that Act as inserted by Section 8 of the 1986 Act, fourthly it referred to several of the more important decisions commencing with Cement Limited v. Commissioner of Valuation [1960] IR 283 and ending with Siucra Eireann Cpt. v. Commissioner of Valuation, a decision of Mr. Justice Hamilton who was then the President of the High Court, now the Chief Justice, on the 6th day of October 1988, fifthly it cited with approval the principles specified by the then President of the High Court, later Chief Justice Finlay in Beamish & Crawford Limited v. Commissioner of Valuation, a unreported decision given on the 8th May 1978, and then starting, at page 38 of the judgement the Tribunal went on to say:- "The purpose of the amendment brought about by the Valuation Act, 1986, manifestly was to provide that certain industrial plant should be deemed rateable while, at the same time, preserving the age old exemption for machinery (save such as shall be erected and used for the production of motive power) ........... The Tribunal believes that if it had to decide the matter before the enactment of the 1986 Act, it would clearly be bound to hold, in accordance with the judicial decisions herein before referred to, that all the installations under appeal in this case constituted machinery and would be entitled to exemption........... With regard to the Limerick Road grain installations there can be no doubt that what goes in is grain and what comes out is grain and there is no doubt that a process of change comes about in the grain and it is right to say that this process of change is "induced" during its storage in the installations. To "induce" a process of change means to being about or cause a process of change. If the grain was not treated - to use a neutral term - in these installations in the way that has been described by the witnesses it would be of no use. The Tribunal has no doubt that this is a highly sophisticated system and that a simpler layout to deal with storage simply would have been feasible. Nonetheless, storage is of the essence whereas the procedures by which a change is brought about is something that can be done by different methods, although at a great deal more expense and using more man-hours than such an installation as this. The question for resolution is whether the primary purpose of the operation is for storage or is it to induce a process of change in the substance? As this has been said above, storage cannot be dispensed with and, therefore, it must be put first in importance in the scheme of things. If it is first in importance then the installation is designed or used primarily for storage. Accordingly, the Tribunal determines that the Limerick Road grain constructions are deemed to be rateable hereditaments. The Tribunal applies the same reasoning in respect of the Clonmel Road grain constructions. With regard to the Castlefarm milk installations (milk powder factory),
the Clonmel milk installations (cheese factory) and the Castlepark milk
installations (butter However, on balance, the Tribunal has come to the conclusion that these installations must be regarded as plant too. However, there is no element of storage or containment except in a peripheral or casual manner and insofar as there is such an element the Tribunal is in no doubt that the primary purpose of these installations is to induce a process of change in the substance contained or transmitted. Indeed the Tribunal is of the opinion that there is induced a process of change at each stage of the respective operations." Accordingly it held that the grain installations were rateable but that the milk installations were not. 6. From the above quoted extract the following can be stated:- 7. It seems to us that the definition of the word "machinery"
from a ratepayers point of view had reached its high water mark in 1986
and that since, subject to the occasional flash flood, the tide has ebbed
and indeed continues to so do. One such example is to be found in the
case of Siucra Eireann Cpt v. Commissioner of Valuation [1992] ILRM 682.
In that case the receptacles in question were heavy duty oil tanks which
contained steam heating/diluting elements with pumps. These were used
for the purposes of loading and unloading oil thereto and therefrom. Having
referred to Section 7 of the 1860 Act and having quoted with approval
from the judgement of O'Higgins C. J. in Beamish & Crawford v. Commissioner
of Valuation [1980] ILRM 149, Mr. Justice McCarthy, in giving the judgement
of the Supreme Court, at page 685 of the report said:- It should be noted that this case was dealt with under the pre-1986 provisions, that the concept of the tanks playing an integral part in the overall process was a relevant consideration as was the predominance of the use or purpose of such tanks and that in approaching the task, as to what was or was not "machinery", one should, if at all possible, avoid using or applying a strained interpretation. Whether in so commenting the court had in mind an approach to interpretation somewhat different from that laid down by the Supreme Court in the Trustees of Kinsale Yacht Club v. Commissioner of Valuation [1994] ILRM 457 is unclear but that issue, if issue there be, is neither relevant or material to this appeal. 8. In the case of the Irish Refining Company Plc v. Commissioner of Valuation
[1995] 2ILRM 223 Mr. Justice Geoghegan was dealing with an issue as to
whether 9. There is one other case in this context that we wish to mention. It is Denis Coakley & Company Limited v. Commissioner of Valuation [1996] 2ILRM 90. The appeals in that case concerned the appellant's grain handling plant at Kennedy Quay, Cork. Its case was that the valuation placed by the Commissioner on the grain silos and weigh bridge should be struck out on the basis that the same constituted "machinery" for the purposes of Section 7 of the 1860 Act. It was submitted on its behalf that the handling process (including delivery, sampling, weighing, dust extraction, turning, fluidisation, mixing and blending) was one continuous process which brought the whole of the plant including the silos within the definition of manufactory and that since the components thereof constituted machinery the same were, as above stated exempt from rating. On behalf of the Commissioner it was suggested that the plant did not constitute a manufactory and furthermore that the silo did not come within the definition of "machinery". 10. Dealing firstly with the question whether or not the handling plant constituted a "manufactory" the Supreme Court through the judgement of Mr. Justice Egan referred to the High Court decision of Cronin (Inspector of Taxes) v. Strand Dairy Limited, unreported, 18/12/1985, a case concerned with the meaning of the words "goods manufactured". Murphy J., in that case, was of the view that the ultimate product could not be said to be manufactured unless the process itself brought about some change in the raw material which was subjected to that process. Furthermore the High Court felt that the economic realities had to be taken into account and that if a commercially different product resulted then it could be said that the same was subject to a manufacturing process. In applying the above Mr. Justice Egan held that what was done to the natural product by way of adaptation was just about sufficient to make the grain, in the final analysis, a commercially different product from that which it was prior to the commencement of the process. The learned judge then went on to hold that the group of bins involved in the process, which were located in a cluster and which were collectively referred to "as a silo", were part of the process and ought to be described as "machinery". In doing so he referred to the Supreme Court decision in the Beamish & Crawford case (supra). 11. From the above we believe that the following general propositions
can be deduced:- 12. In this case the principal submission made, on behalf of the Commissioner
was based on the Supreme Courts decision in CaribMolasses Company Limited
v. 13. On these facts the single issue before the court was whether or not
the tanks in question constituted non-rateable plant under the said Reference
No. 1 of the On behalf of the Commissioner it was argued that insofar as there may
have been a process of change this took place outside, and at a time when
the molasses had 14. Mr. Justice Blaney was perfectly satisfied that, on the findings
of fact made by the Valuation Tribunal, the respondents submissions were
correct and accordingly he decided that insofar as there was a process
of change the same occurred outside the tanks and that in consequence
such tanks were rateable plant under Reference No. 1 of the Schedule to
the 1860 Act. He then went on to deal with the company's principal submission,
as formulated above, by stating:- Apart from the specific facts of this CaribMolasses case it appears to us that in the judgement above referred to, the Supreme Court considered these tanks in isolation one from the other and certainly in isolation from the attached pipe work. It treated each tank as a distinct and separate unit. Furthermore it held that the "part of the integral process" approach did not apply and was not available where the issue of rateability fell to be determined under Reference No. 1 of the Schedule to the 1860 Act. Effectively it declined to extend the reasoning in the Beamish & Crawford case (supra) to a case where the issue of rateability was not argued under Section 7 of the 1860 Act but rather under the aforesaid Reference No. 1. 15. In applying the above principles where appropriate to the facts of the instant case we find it necessary to make a distinction between the tanks which hold the raw milk and the tanks which contain the skimmed milk. In respect of the latter three tanks we are perfectly satisfied that what goes in to those tanks is skimmed milk and what comes out is likewise the same skimmed milk. It will be recalled that the necessary changes in raw milk to produce skimmed milk have already taken place before the latter is delivered to the companies premises. To have available skimmed milk is of course necessary for the manufacturing process which in turn means that the company must make available a facility to hold or contain that milk until such time as the process is ready to receive it. Such a holding takes place in these three tanks. We are satisfied that such tanks are designed or used primarily if not exclusively for storage or containment and certainly not either primarily or at all to induce a process of change. Any activity which takes place within these tanks does so for the purposes of retaining or maintaining the skimmed milk in its original condition. Indeed, if the process was otherwise ready this milk could by-pass any entry into or stay in these tanks and go directly to the manufacturing process of cheese. That it does not do so has nothing to do with any requirement of the manufacturing process itself. Accordingly we hold that these tanks are plant and are rateable as such within Reference No. 1 of the Schedule to the 1860 Act. 16. The position in our view however is quite different with regard to
the five tanks which hold the raw or whole milk. As above stated it is
crucial to the operations 17. Could we test this proposition by rhetorically asking whether or not, if there was no requirement for storage and if the manufacturing process so permitted, could the raw milk as delivered by the four co-operative societies be pumped straight into the manufacturing process and avoid altogether these tanks. From the evidence of Mr. Holland we are quite satisfied that this could not take place. Accordingly it is our view and we so find that in respect of these five tanks the same are designed or used primarily to induce a process of change in the milk contained therein and as such are non-rateable plant within the meaning of the aforesaid Reference No. 1. 18. Finally, as the parties will undoubtedly appreciate, we in this Tribunal are statutorily obliged to hear and determine any appeal properly brought before us and in respect of which we have jurisdiction. Given the nature of the rating system and the fresh periodic imposition of liability there cannot be any prohibition on any qualifying person to initiate a revision at any time or thereafter to bring an appeal to this Tribunal. If however there has been no material change in facts, circumstances or the relevant law then every such appeal will be dealt with in accordance with the juris prudence already well established by this Tribunal. In this case however we are satisfied that the Commissioner could not be justly or otherwise critcised for his approach to this revision and this appeal. 19. The determination of the Tribunal therefore is that as set out above.
As the result will require a valuation to be placed on three tanks the
parties may agree an
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